I 

114TH CONGRESS 

1ST SESSION H. R. 4236 

To promote savings by providing a tax credit for eligible taxpayers who 

contribute to savings products and to facilitate taxpayers receiving this 

credit and open a designated savings product when they file their Federal 

income tax returns. 

IN THE HOUSE OF REPRESENTATIVES 

DECEMBER 10, 2015 

Mr. SERRANO (for himself, Mr. CROWLEY, Mr. ELLISON, Mr. HINOJOSA, Ms. 

MENG, Mr. PIERLUISI, Mr. CARTWRIGHT, Mr. NOLAN, Ms. DELAURO, 

Mr. VARGAS, Ms. ROYBAL-ALLARD, Ms. MICHELLE LUJAN GRISHAM of 

New Mexico, Mr. BEN RAY LUJA ́N of New Mexico, Mr. JEFFRIES, Ms. 

CLARKE of New York, Ms. VELA ́ZQUEZ, and Mr. HASTINGS) introduced 

the following bill; which was referred to the Committee on Ways and 

Means 

A BILL 

To promote savings by providing a tax credit for eligible 

taxpayers who contribute to savings products and to 

facilitate taxpayers receiving this credit and open a designated savings product when they file their Federal 

income tax returns. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Financial Security 

5 Credit Act of 2015’’. 


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1 SEC. 2. FINDINGS. 

2 Congress finds the following: 

3 (1) United States households are experiencing 

4 significant levels of financial vulnerability, character5 ized by a lack of personal savings. The personal sav6 ings rate reached historic lows in the past decade, 

7 and a lack of personal savings was a major contrib8 utor to the recession of 2007–2009, and to the slow 

9 recovery of ensuing years. 

10 (2) Households continue to lack the savings or 

11 structures to meet short-term and long-term needs, 

12 as evidenced by the following: 

13 (A) According to the Employee Benefit Re14 search Institute, among full-time, full-year wage 

15 and salary workers ages 21–64, only 54.5 per16 cent participated in a retirement plan in 2013. 

17 (B) According to the Federal Deposit In18 surance Corporation 2013 Survey of Unbanked 

19 and Underbanked Households, an estimated 7.7 

20 percent of United States households are 

21 unbanked. These households do not have a 

22 checking or savings account. In total, 31.2 per23 cent of households do not have a savings ac24 count. 

25 (C) According to the Pew Charitable 

26 Trusts, the majority of American households 


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1 (55 percent) are savings-limited, meaning they 

2 can replace less than one month of their income 

3 through liquid savings. 

4 (3) Financial shocks are common and savings 

5 make households more resilient to financial shocks 

6 and more upwardly mobile, as evidenced by the fol7 lowing: 

8 (A) Substantial fluctuations in family in9 come are the norm. In any given 2-year period, 

10 nearly half of households experience an income 

11 gain or drop of more than 25 percent, a rate 

12 of volatility that has been relatively constant 

13 since 1979. 

14 (B) Even small sums of savings, $2,000 or 

15 less, have been shown to significantly reduce 

16 the incidence of negative financial or material 

17 outcomes, such as foregoing adequate nutrition. 

18 (C) Children born to low-income, high-sav19 ing parents are much more likely (71 percent) 

20 to move up the economic ladder than children 

21 born to low-income, low-saving parents (50 per22 cent) over a generation. 

23 (4) Emergency savings are necessary to protect 

24 retirement savings from early, penalized withdrawals 

25 and to support long-term retirement security. 


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1 (5) Successful pilot programs administered 

2 through local Volunteer Income Tax Assistance sites 

3 in cities as diverse as Houston, Texas; Newark, New 

4 Jersey; New York City, New York; San Antonio, 

5 Texas; and Tulsa, Oklahoma, have shown that tax 

6 filers with low incomes can and will save when pre7 sented with the right incentive at the right moment 

8 and access to an account. The potential of increas9 ing savings at tax time among low- and moderate10 income households has been further validated by the 

11 low-touch, large-scale pilot Refund to Savings. 

12 (6) It is in the economic interests of the United 

13 States to promote savings among all members of so14 ciety, regardless of income. 

15 SEC. 3. FINANCIAL SECURITY CREDIT. 

16 (a) IN GENERAL.—Subpart C of part IV of sub17 chapter A of chapter 1 of the Internal Revenue Code of 

18 1986 is amended by inserting after section 36B the fol19 lowing new section: 

20 ‘‘SEC. 36C. FINANCIAL SECURITY CREDIT. 

21 ‘‘(a) ALLOWANCE OF CREDIT.—There shall be al22 lowed as a credit against the tax imposed by this subtitle 

23 for a taxable year an amount equal to the lesser of— 

24 ‘‘(1) $500, or 


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1 ‘‘(2) 50 percent of the total amount deposited 

2 or contributed by the taxpayer in accordance with 

3 subsection (b)(1) into designated savings products 

4 during such taxable year. 

5 ‘‘(b) LIMITATIONS.— 

6 ‘‘(1) CREDIT MUST BE DEPOSITED IN OR CON7 TRIBUTED TO DESIGNATED SAVINGS PRODUCT.—No 

8 amount shall be allowed as a credit under subsection 

9 (a) for a taxable year unless the taxpayer designates 

10 on the taxpayer’s return of tax for the taxable year 

11 that the amount of the credit for such taxable year 

12 be deposited in or contributed to one or more des13 ignated savings products of the taxpayer and the 

14 Secretary makes such deposits or contributions to 

15 the designated savings products. 

16 ‘‘(2) LIMITATION BASED ON ADJUSTED GROSS

17 INCOME.— 

18 ‘‘(A) IN GENERAL.—The amount of the 

19 credit allowable under subsection (a) shall be 

20 reduced (but not below zero) by an amount 

21 which bears the same ratio to the amount of 

22 such credit (determined without regard to this 

23 paragraph) as— 


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1 ‘‘(i) the amount by which the tax2 payer’s adjusted gross income exceeds the 

3 threshold amount, bears to 

4 ‘‘(ii) $15,000. 

5 ‘‘(B) THRESHOLD AMOUNT.—For purposes 

6 of subparagraph (A), the term ‘threshold 

7 amount’ means— 

8 ‘‘(i) $55,500 in the case of a joint re9 turn, 

10 ‘‘(ii) $41,625 in the case of an indi11 vidual who is not married, and 

12 ‘‘(iii) 50 percent of the dollar amount 

13 in effect under clause (i) in the case of a 

14 married individual filing a separate return. 

15 For purposes of this subparagraph, marital sta16 tus shall be determined under section 7703. 

17 ‘‘(c) DESIGNATED SAVINGS PRODUCT.—For pur18 poses of this section, the term ‘designated savings product’ 

19 means any of the following: 

20 ‘‘(1) A qualified retirement plan (as defined in 

21 section 4974(c)). 

22 ‘‘(2) A qualified tuition program (as defined in 

23 section 529). 

24 ‘‘(3) A Coverdell education savings account (as 

25 defined in section 530). 


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1 ‘‘(4) A United States savings bond. 

2 ‘‘(5) A certificate of deposit (or similar class of 

3 deposit) with a duration of at least 8 months. 

4 ‘‘(6) A savings account. 

5 ‘‘(7) Any other type of savings product consid6 ered to be appropriate by the Secretary for the pur7 poses of this section. 

8 ‘‘(d) SPECIAL RULES.— 

9 ‘‘(1) TAX REFUNDS TREATED AS DEPOSITED

10 OR CONTRIBUTED IN CURRENT TAXABLE YEAR.— 

11 For purposes of subsection (a)(2), the amount of 

12 any overpayment of taxes refunded to the taxpayer 

13 (reduced by any amount attributable to the credit al14 lowed under this section by reason of being consid15 ered as an overpayment by section 6401(b)) and 

16 designated for deposit in or contribution to a des17 ignated savings product of the taxpayer shall be 

18 treated as an amount deposited or contributed in the 

19 taxable year in which so deposited or contributed. 

20 ‘‘(2) MAINTENANCE OF DEPOSIT.—No con21 tribution or deposit shall be taken into account 

22 under subsection (a) unless such contribution or de23 posit remains in the designated savings product for 

24 not less than 8 continuous months. 


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1 ‘‘(3) REDUCTION IN DEPOSITS IN DESIGNATED

2 SAVINGS PRODUCTS.— 

3 ‘‘(A) IN GENERAL.—The amount of depos4 its or contributions taken into account under 

5 subsection (a) shall be reduced (but not below 

6 zero) by the aggregate amount of distributions 

7 (other than interest from designated savings 

8 products specified in paragraphs (4), (5), (6), 

9 and (7) of subsection (c)) from all designated 

10 savings products of the taxpayer during the 

11 testing period. The preceding sentence shall not 

12 apply to the portion of any distribution which 

13 is not includible in gross income by reason of 

14 a trustee-to-trustee transfer or a rollover dis15 tribution. 

16 ‘‘(B) TESTING PERIOD.—For purposes of 

17 subparagraph (A), the testing period, with re18 spect to a taxable year, is the period which in19 cludes— 

20 ‘‘(i) such taxable year, 

21 ‘‘(ii) the 2 preceding taxable years, 

22 and 

23 ‘‘(iii) the period after such taxable 

24 year and before the due date (including exVerDate Sep 11 2014 21:51 Dec 14, 2015 Jkt 059200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H4236.IH H4236

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1 tensions) for filing the return of tax for 

2 such taxable year. 

3 ‘‘(C) OTHER RULES.—Rules similar to 

4 subparagraphs (C) and (D) of section 

5 25B(d)(2) shall apply for purposes of this para6 graph. 

7 ‘‘(4) DENIAL OF DOUBLE BENEFIT.—No credit 

8 shall be allowed under section 25B with respect to 

9 any deposit for which a credit is allowed under this 

10 section. 

11 ‘‘(5) COORDINATION WITH OTHER REFUND12 ABLE CREDITS.—The credit allowed by subsection 

13 (a) shall be taken into account after taking into ac14 count the credits allowed by (or treated as allowed 

15 by) this subpart (other than this section). 

16 ‘‘(e) INFLATION ADJUSTMENTS.— 

17 ‘‘(1) CREDIT LIMIT.—In the case of any taxable 

18 year beginning in a calendar year after 2016, the 

19 dollar amount in subsection (a)(1) shall be increased 

20 by an amount equal to— 

21 ‘‘(A) such dollar amount, multiplied by 

22 ‘‘(B) the cost-of-living adjustment deter23 mined under section 1(f)(3) for the calendar 

24 year in which the taxable year begins, deter25 mined by substituting ‘calendar year 2015’ for 


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1 ‘calendar year 1992’ in subparagraph (B) 

2 thereof. 

3 ‘‘(2) AGI THRESHOLDS.—In the case of any 

4 taxable year beginning in a calendar year after 

5 2016, each of the dollar amounts in clauses (i) and 

6 (ii) of subsection (b)(2)(B) shall be increased by an 

7 amount equal to— 

8 ‘‘(A) such dollar amount, multiplied by 

9 ‘‘(B) the cost-of-living adjustment deter10 mined under section 1(f)(3) for the calendar 

11 year in which the taxable year begins, deter12 mined by substituting ‘calendar year 2015’ for 

13 ‘calendar year 1992’ in subparagraph (B) 

14 thereof. 

15 ‘‘(3) ROUNDING.— 

16 ‘‘(A) CREDIT LIMIT.—If any increase 

17 under paragraph (1) is not a multiple of $10, 

18 such increase shall be rounded to the next low19 est multiple of $10. 

20 ‘‘(B) AGI THRESHOLDS.—If any increase 

21 under paragraph (1) is not a multiple of $100, 

22 such increase shall be rounded to the next low23 est multiple of $100. 

24 ‘‘(f) REGULATIONS.—Not later than 12 months from 

25 date of enactment of this section, the Secretary shall issue 


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1 such regulations or other guidance as the Secretary deter2 mines necessary or appropriate to carry out this section, 

3 including regulations or guidance— 

4 ‘‘(1) to ensure that designated savings products 

5 are subject to appropriate reporting requirements, 

6 including the reporting of contributions and other 

7 deposits during the calendar year, end of calendar 

8 year account balances, and earnings from designated 

9 savings products specified in paragraphs (4), (5), 

10 (6), and (7) of subsection (c), 

11 ‘‘(2) to carry out the maintenance of deposit 

12 provisions under subsection (d)(2), and 

13 ‘‘(3) to prevent avoidance of the purposes of 

14 this subsection.’’. 

15 (b) CONFORMING AMENDMENTS.— 

16 (1) Section 1324(b)(2) of title 31, United 

17 States Code, is amended by inserting ‘‘36C,’’ after 

18 ‘‘36B,’’. 

19 (2) The table of sections for subpart C of part 

20 IV of subchapter A of chapter 1 of the Internal Rev21 enue Code of 1986 is amended by inserting after the 

22 item relating to section 36C the following new item: 

‘‘Sec. 36C. Financial security credit.’’. 

23 (c) EFFECTIVE DATE.—The amendments made by 

24 this section shall apply to taxable years beginning after 

25 December 31, 2015. 


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1 SEC. 4. OPENING OF ACCOUNTS ON FEDERAL INCOME TAX 

2 RETURNS TO FACILITATE SAVINGS. 

3 (a) NOTIFICATION OF OPTION.— 

4 (1) IN GENERAL.—The Commissioner of Inter5 nal Revenue shall notify individuals who may qualify 

6 for a credit under section 36C of the Internal Rev7 enue Code of 1986 but fail to provide sufficient in8 formation to allow the Secretary to deposit or con9 tribute the credit amount to a designated savings 

10 product that they have the option of an electronic di11 rect deposit and that they may be eligible for the fi12 nancial security credit under section 36C of such 

13 Code if they deposit a refund or a portion of their 

14 refund in any designated savings product. 

15 (2) METHOD OF NOTIFICATION.—The notifica16 tion under paragraph (1) shall be made through— 

17 (A) a public awareness program under18 taken by the Secretary of the Treasury, in con19 cert with the Commissioner of Internal Revenue 

20 and others as necessary, beginning not later 

21 than 6 months after the date of the enactment 

22 of this Act; 

23 (B) tax return preparers and low-income 

24 taxpayer clinics; and 


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1 (C) the inclusion of such a notice in the in2 struction material for any Federal income tax 

3 return. 

4 (b) ESTABLISHMENT OF DESIGNATED ACCOUNT

5 PROGRAM.—The Secretary of the Treasury shall develop, 

6 in consultation with the Federal Management System, a 

7 program to minimize the delivery of non-electronic Federal 

8 income tax refunds by depositing refunds electronically to 

9 a safe, low-cost account held by a depository institution. 

10 This program shall include— 

11 (1) provisions for such tax refunds to be depos12 ited into a designated account; 

13 (2) establishment of account parameters with 

14 respect to minimum balance requirements, limita15 tions on overdrafts, overdraft fees, other fees, and 

16 additional requirements; 

17 (3) establishment of means for the taxpayer to 

18 access the account electronically and to have timely, 

19 direct access to the funds in the account; and 

20 (4) provisions to allow taxpayers to open an ac21 count with their Federal income tax refunds through 

22 financial service providers, so long such account is 

23 held at a depository institution insured under the 

24 Federal Deposit Insurance Act or a credit union in25 sured under the Federal Credit Union Act. 


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1 (c) EFFECTIVE DATE.—The notification under sub2 section (a) and the program under subsection (b) shall be 

3 effective with respect to Federal income tax returns for 

4 taxable years beginning after December 31, 2015. 

Æ 


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